Untangling the Knot: A Guide to Equitably Dividing Assets in Divorce

Dividing Assets

Dividing assets in a divorce can be complex, but it’s important to understand the process. New Jersey is an equitable distribution state, meaning that the parties’ assets are distributed equitably or fairly, as opposed to being distributed equally (50/50) in every case.

Here are the three steps a court follows to determine how assets are equitably distributed. If you are thinking about filing for divorce, you should consider each of these steps and how to best position your interests in your property for equitable distribution.

Step 1: Identifying Property Subject to Distribution

All assets acquired during the marriage are generally subject to distribution, regardless of who owns them. However, certain exceptions apply. Inherited or gifted property (excluding gifts between spouses) may not be subject to distribution, unless it’s mixed with marital assets. For example, if inherited funds are deposited into a joint bank account, they may be considered a gift to the marriage and subject to distribution. Premarital property can also be subject to distribution if it’s mixed with marital assets or improved during the marriage.

It is important to note that whomever is claiming that certain property is separate or premarital property and, therefore, not subject to equitable distribution, must be able to produce proof demonstrating the separate nature of that property. If this proof cannot be supplied, then the property will be subject to equitable distribution

Step 2: Valuing Property for Distribution

Determining the value of property is important for distribution purposes. If the parties can’t agree on a value, such as for real estate, personal belongings, business interests, or pensions, an expert appraisal may be necessary. The parties should also decide whether one party will buy out the other’s interest or if the property will be sold and the proceeds divided.

Property is eligible for distribution from the date of the marriage until the filing of a divorce complaint or an agreed cut-off date. If a divorce is being considered, filing the complaint early can stop the accumulation of new marital assets that may be subject to equitable distribution. Assets acquired or new accounts established after the filing date are generally considered separate property.

Step 3: Equitably Distributing Property

Courts have discretion in determining how to distribute property fairly. New Jersey law provides a list of factors to consider, including the length of the marriage, the parties’ ages and health, their standard of living, written agreements, economic circumstances, earning capacities, custodial responsibilities, contributions to each other’s earning power and property value, contribution as a homemaker, and debts and liabilities.

Even if one spouse was the primary earner, the court recognizes marriage as a partnership. Therefore, assets acquired during the marriage are seen as the efforts of both spouses.

When entering a marriage, you and your spouse intertwine your assets. In divorce, they must be distributed fairly. It is critical to be mindful of how property may be divided and how your actions pertaining to that property can affect its ultimate distribution.

The Matrimonial and Family Law team at HDRB&B can handle the most intricate financial cases with expertise. Our attorneys specialize in navigating complex situations involving business assets and fair distribution of property. With their combined backgrounds in business and matrimonial law, they strive to achieve the best possible outcomes for each and every client.